While the Canadian Real Estate Association (CREA) has updated its MLS® forecasts for national home sales, it should not come as a big surprise when you think of how vast and varied local markets are throughout the country. A regular comment from CREA’s president is that markets are local, so you cannot read too much into one market going for a tumble and the other soaring like an eagle.
In fairness to CREA’s chief economist, Gregory Klump, he does a good job trying to assess each province and will make adjustments from time to time.
Without jumping ahead to 2014, how did CREA make adjustments for Manitoba this year? It actually bumped up our average price increase by one percentage point to 3.6 per cent, as prices are remaining firm in this province due to healthy demand and a restrained supply, comparatively speaking, although more listings are coming onto the market this year, which is encouraging for those buyers who felt left out of the market in previous years.
Where CREA made a more significant change is in its updated forecast for sales. It lowered it from MLS® sales being slightly better than 2012 to being 0.7 lower this year.
Klump may not have anticipated the impact of the tighter new mortgage rules and guidelines on Manitoba when compared to other provinces — our market is more affordable. Nevertheless, there have been an effect in Manitoba. First-time buyers are no longer able to stretch their monthly payments out over 30 years and higher prices now exist for homes that were at one time more accessible.
Helping soften the blow somewhat this year is the strong showing of condominium sales. As a property type, they are more affordable than homes. The most active price range for condominium sales in WinnipegREALTORS® market region is from $150,000 to $199,999 whereas for residential-detached or single family homes, it is from $250,000 to $299,999.
With homes still making up the lion’s share of MLS® sales compared to condominiums, the upward advance in condo sales activity this year is no where near enough to counter the decline in house sales. In WinnipegREALTORS® 2013 market forecast there was a downside four per cent market adjustment built in, as a result of the concern for first-time buyers having more difficulty attaining homeownership this year. Still, the minus four per cent on the bottom part of the forecast range is not that far off the present year-to-date home sale decline of eight per cent. With six months to go and signs of buyers adjusting to tougher mortgage regulations, some gains could be made in the second half of the year.
As for house and condominium prices, the WinnipegREALTORS® forecast is very close to single-digit percentage increase predicted at the start of 2013. At six per cent, condos are running a little bit higher at this point over last year, while homes are over five per cent. MLS® dollar volume, which includes all property types, is at less than two per cent drop, which falls right within the minus two to plus two range forecast.
All in all, the local market is faring well this year when you consider it is up against one of WinnipegREALTORS® best years ever. There were over 13,000 MLS® sales in 2012 and a record dollar volume well in excess of $3 billion. A lot of the same positive economic indicators (e.g., Manitoba June jobless rate of only five per cent) are still at play, including highly attractive mortgage rates.
As noted in WinnipegREALTORS® June MLS® market release, there is good reason to be optimistic about a decent start to the third quarter, since there are more listings going into July than we have seen since 1999. Buyers should welcome having a better selection of inventory to choose from. It should also keep a lid on price increases as predicted.
Two quotes from CREA’s updated 2013 MLS® market forecast released in June have a bearing on the real
estate market across the nation.
“All real estate markets are local, with prospects that differ by region and community,” said Laura Leyser, CREA president. “For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live or would like to live.”
“Canadians remain confident about the value of home ownership,” said Gregory Klump, CREA’s Chief Economist. “Job market trends and low interest rates remain supportive for Canada’s housing sector, so we remain upbeat about prospects for sales and average prices this year and next.”